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THE LAW ON FOREIGN INVESTMENT IN VIETNAM

THE LAW ON FOREIGN INVESTMENT IN VIETNAM

In order to expand economic cooperation with foreign countries, serve the cause of industrialization and modernization and develop the national economy on the basis of the efficient exploitation and utilization of the resources of the country;

Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam;

This Law provides for foreign direct investment in the Socialist Republic of Vietnam,

Chapter I

GENERAL PROVISIONS

Article 1.- The State of the Socialist Republic of Vietnam encourages foreign investors to invest in Vietnam on the basis of respect for the independence, sovereignty of Vietnam, observance of Vietnamese laws, equality and mutual benefits.

The State of the Socialist Republic of Vietnam guarantees the ownership of the investment capital and other legitimate interests of foreign investors; provide favorable conditions and simple and expeditious procedures for foreign investors in Vietnam.

Article 2.- The following terms in this Law shall be construed as follows:

1. "Foreign direct investment" means the transfer of capital in money or any asset into Vietnam by foreign investors to carry out investment activities in accordance with the provisions of this Law.

2. "Foreign investor" means a foreign economic organization or a foreign individual investing in Vietnam.

3. "Foreign party" means a party consisting of one or more foreign investors.

4. "Vietnamese party" means a party consisting of one or more Vietnamese enterprises from all economic sectors.

5. "The two parties" means the Vietnamese party and the foreign party.

"Multi-party" means the Vietnamese party and more than one foreign party or the foreign party and more than one Vietnamese party or more than one Vietnamese party and more than one foreign party.

6. "Enterprises with foreign invested capital" are joint venture enterprises and enterprises with 100% foreign invested capital.

7. A "joint venture enterprise" means an enterprise established in Vietnam through the cooperation between two or more parties under a joint venture contract or an agreement signed by the Government of the Socialist Republic of Vietnam and a foreign Government or between an enterprise with foreign invested capital and a Vietnamese enterprise or between a joint venture enterprise and a foreign investor under a joint venture contract.

8. "Enterprises with 100% foreign invested capital" means an enterprise the capital of which is 100% invested in Vietnam by a foreign investor.

9. "Business cooperation contract" means a document signed by two or more parties for carrying out investment activities without establishing a legal person.

10. A "joint venture contract" means a document signed by the parties mentioned in Point 7 of this Article for the establishment of a joint venture enterprise in Vietnam.

11. "Build-Operate-Transfer contract" means a document signed by a competent State agency of Vietnam and a foreign investor for the construction and operation of an infrastructure project within a certain period of time; upon the expiry of the period, the foreign investor shall transfer, without indemnification, the project to the State of Vietnam.

12. "Build-Transfer-Operate contract" means a document signed by a competent State agency of Vietnam and a foreign investor for the construction of an infrastructure project; upon the completion of the after construction the foreign investor shall transfer the project to the State of Vietnam. The Government of Vietnam shall give the investor the right to operate the project within a certain period of time so as to retrieve his/her invested capital and earn reasonable profits.

13. "Build-Transfer contract" is a document signed by a competent State agency of Vietnam and a foreign investor for the construction of an infrastructure project; upon the completion of the construction, the foreign investor shall transfer the project to the State of Vietnam. The Government of Vietnam shall provide conditions for the foreign investor to carry out another project so as to retrieve his/her invested capital and earn reasonable profits.

14. "Export Processing Zone" is an industrial zone having delimited geographical boundaries, established by or under the permission of the Government, specializing in the production of goods for export and in the provision of services for the production of export goods and export activities.

15. "Export Processing Enterprise" is an enterprise established by the Government and operating under the Government�s stipulations on export processing enterprises, specializing in the production of export goods, in the provision of services for the production of export goods and export activities.

16. "Industrial Zone" is a zone having delimited geographical boundaries, established by or under the permission of the Government, specializing in the production of industrial goods and in the provision of services for industrial production.

17. "Industrial Zone Enterprise" is an enterprise established and operating within an Industrial Zone.

18. "Invested capital" means the capital for carrying out an investment project, including the prescribed capital and borrowed capital.

19. The "Prescribed capital" of an enterprise with foreign invested capital is the amount of capital required for establishing the enterprise as stated in the enterprise�s Statute.

21. "Capital contribution" is the capital contributed by each party to the prescribed capital of the enterprise.

21. "Reinvestment" means the use of profits and other legitimate earnings from investment activities in Vietnam to invest in an on-going or new project in Vietnam in the investment forms prescribed in this Law.

Article 3.- Foreign investors may invest in Vietnam in any sector of the national economy.

The State of Vietnam shall encourage foreign investors to invest in the following domains and geographical areas:

1. Domains:

a/ The production of goods for export;

b/ The raising, planting and processing of agricultural, forestry and aquatic products;

c/ The use of hi-tech and state-of-the-art technologies, protection of the ecological environment, investment in research and development;

d/ Intensive labor employment, processing of raw materials and efficient utilization of natural resources in Vietnam;

e/ Constructing infrastructure projects and important industrial production establishments.

2. Geographical areas:

a/ Mountainous, deep-lying and remote areas;

b/ Areas with difficult socio-economic conditions.

The State of Vietnam shall not permit foreign investment in such domains and geographical areas that may damage national defense and security, the historical and cultural relics, the fine traditions and customs, the environment and ecology.

Basing itself on the development planning and orientations for each period, the Government shall define the geographical areas where investment is encouraged, promulgate a list of projects in which investment is or is specially encouraged, a list of domains of conditional investment and a list of domains in which foreign investment is not permitted.

Private Vietnamese economic organizations shall be allowed to enter into investment cooperation with foreign investors in the domains and under the conditions stipulated by the Government.

Chapter II

FORMS OF INVESTMENT

Article 4.- Foreign investors may invest in Vietnam in the following forms:

1. Business cooperation under a business cooperation contract;

2. Joint venture enterprises;

3. Enterprises with 100% foreign invested capital.

Article 5.- Two or more parties may enter into business cooperation under a business cooperation contract such as profit-sharing or product-sharing production cooperation and other business cooperation forms.

The objects, contents and duration of business, the interests, obligations and responsibilities of each party and the relationships between the parties shall be agreed upon by the parties and written in the business cooperation contract.

Article 6.- Two or more parties may cooperate to establish in Vietnam a joint venture enterprise under a joint venture contract.

A joint venture enterprise may cooperate with a foreign investor or a Vietnamese enterprise to establish a new joint venture in Vietnam.

A joint venture enterprise shall be established in the form of a limited liability company with the legal person status as prescribed by Vietnamese law.

Article 7.-

1. The foreign party to a joint venture enterprise may make its contributions to the prescribed capital in:

a/ Foreign currency and/or Vietnamese currency originating from the investment in Vietnam;

b/ Equipment, machinery, workshops or other constructions;

c/ The value of the industrial property right, technical know-how, technological processes, technical services.

2. The Vietnamese party to a joint venture enterprise may make its contribution to the prescribed capital in:

a/ Vietnamese currency and/or foreign currency;

b/ The value of the land-use right in accordance with the land legislation;

c/ The national resources, the value of the right to use water or sea surface as prescribed by law;

d/ Equipment, machinery, workshops or other constructions;

e/ The value of the industrial property right, technical secrets, technological processes, technical services.

3. The capital contribution by the parties in forms other than those defined in Item 1 and Item 2 of this Article must be approved by the Government.

Article 8.- The capital contributed by the foreign party(ies) to the prescribed capital of a joint venture enterprise shall not be limited as to its maximum as mutually agreed upon by the parties but must be not less than 30% of the prescribed capital, except for cases stipulated by the Government.

With regard to a multi-party joint venture enterprise, the minimum capital contribution by each Vietnamese party shall be stipulated by the Government.

With regard to an important economic establishment as decided by the Government, the parties shall agree to gradually increase the proportion of the Vietnamese party�s contribution to the prescribed capital of the joint venture enterprise.

Article 9.- The value of the capital contributed by each party to a joint venture enterprise shall be determined according to market price at the moment the capital contribution is made. The capital contribution schedule shall be, as agreed upon by the parties, written in the joint venture contract and approved by an agency performing State management over foreign investment.

The value of equipment and machinery used for capital contribution must be certified by an independent evaluation body.

The parties involved shall be accountable for the authenticity and accuracy of their capital contribution value. In case of necessity, the agency performing the State management over foreign investment shall be entitled to nominate an evaluation body to reinspect the capital contribution values of the parties.

Article 10.- The parties shall share the profits and bear the risks associated with the joint venture enterprise in proportion to their respective capital contributions, unless otherwise agreed upon by the parties in the joint venture contract.

Article 11.- The Board of Management shall be the leading body of a joint venture enterprise consisting of representatives of the parties to the joint venture enterprise.

Each party shall appoint its representatives to the Board of Management in proportion to its contribution to the prescribed capital of the joint venture enterprise.

With regard to a two-party joint venture each shall party have at least two members on the Board of Management.

With regard to a multi-party joint venture, each party shall have at least one member on the Board of Management.

If a joint venture enterprise involves one Vietnamese party and more than one foreign party or one foreign party and more than one Vietnamese party, such Vietnamese or foreign party shall be entitled to appoint at least 2 members to the Board of Management.

In the Board of Management of a joint venture enterprise established between a joint venture enterprise operating in Vietnam and a foreign investor or a Vietnamese enterprise, the operating joint venture enterprise shall have at least two members, at least one of whom shall be from the Vietnamese party.

Article 12.- The Chairman of the Board of Management of a joint venture enterprise shall be appointed by common agreement between the involved parties. The Chairman of the Board of Management shall be responsible for convening and presiding over the meetings of the Board of Management and supervising the implementation of its resolutions.

The General Director and Deputy General Directors shall be appointed and dismissed by the Board of Management and take responsibility before the Board of Management and before Vietnam�s law for the management and direction of the enterprise�s activities.

Either the General Director or the first Deputy General Director shall be a Vietnamese citizen.

The tasks and powers of the Chairman of the Board of Management, the General Director and Deputy General Directors shall be written in the enterprise�s Statute.

Article 13.- The regular meetings of the Board of Management shall be decided by itself. The Board of Management may convene extraordinary meetings at the proposal of the Chairman of the Board of Management or two-thirds of its members or the General Director or the first Deputy General Director. The meetings of the Board of Management shall be convened by its Chairman.

A meeting of the Board of Management must be attended by at least two thirds of its members representing the parties to the joint venture.

Article 14.-

1. All the most important issues concerning the organization and operation of a joint venture enterprise including the appointment and dismissal of the General Director, the first Deputy General Director and the Chief Accountant; the amendment and supplement to the enterprise�s Statute; the approval of the annual financial statements of revenues and expenditures and spending accounts of the constructions; the borrowing of investment capital shall be decided by the Board of Management on the principle of consensus among the Board�s members present at the meeting.

The parties to a joint venture enterprise may agree in its Statute that other issues should be decided on the principle of consensus.

2. For issues not defined in Item 1 of this Article, the Board of Management shall decide on the principle of majority vote by the Board�s members present at the meeting.

Article 15.- The foreign investors may establish in Vietnam enterprises with 100% foreign invested capital.

An enterprise with 100% foreign invested capital shall be established in the form of a limited liability company with the legal person status in accordance with Vietnamese law.

An enterprise with 100% foreign invested capital may cooperate with a Vietnamese enterprise to establish a joint venture enterprise.

With regard to important economic enterprises as decided by the Government, Vietnamese enterprises may, on the basis of agreement with the owners of such enterprises, purchase part of their capital to form a joint venture enterprise.

Article 16.- The prescribed capital of an enterprise with foreign invested capital must be equal to at least 30% of its invested capital. In special cases, this percentage may be less than 30% but it must be approved by an agency performing State management over foreign investment.

During the course of its operation, an enterprise with foreign invested capital must not reduce its prescribed capital.

Article 17.- The operational duration of an enterprise with foreign invested capital and the term of a business cooperation contract shall be written in the Investment License for each project as stipulated by the Government but shall not exceed 50 years.

Basing itself on the provisions of the Standing Committee of the National Assembly, the Government shall decide a longer duration for each project but the maximum duration shall not exceed 70 years.

Article 18.- Foreign investors may invest in Industrial Zones and Export Processing Zones in the forms prescribed in Article 4 of this Law.

Vietnamese enterprises of all economic sectors may cooperate with foreign investors to invest in Industrial Zones and Export Processing Zones in the forms defined in Point 1, Point 2, Article 4 of this Law or may establish enterprises with 100% of capital owned by themselves.

The relations of goods exchange between the enterprises in Vietnamese market and the export processing enterprises shall be regarded as export-import relations and must comply with import-export legislation. The export processing enterprises may purchase materials, supplies and goods from the local market and bring them into the Export Processing Zone according to simple and convenient procedures stipulated by the Government.

The Government shall issue specific regulations on the Industrial Zones and Export Processing Zones.

Article 19.- A foreign investor who is to invest in constructing an infrastructure project(s) may sign with a competent State agency of Vietnam a Build-Operate-Transfer contract, a Build-Transfer-Operate contract or a Build-Transfer contract. The foreign investor shall be entitled to enjoy the benefits and perform the obligations defined in the contract.

The Government shall detail the investment under Build-Operate-Transfer, Build-Transfer-Operate and Build-Transfer contracts.

Chapter III

INVESTMENT GUARANTEE MEASURES

Article 20.- The State of the Socialist Republic of Vietnam shall guarantee fair and satisfactory treatment to foreign investors investing in Vietnam.

Article 21.- Throughout the process of their investment in Vietnam, the foreign investors� lawful capital and other assets shall not be expropriated or requisitioned by means of administrative measures, and the enterprises with foreign invested capital shall not be nationalized.

The State of the Socialist Republic of Vietnam shall protect the industrial property right and ensure the legitimate interests of foreign investors in their technology transfer activities in Vietnam.

In cases where a change in the provisions of Vietnamese law causes damage to the interests of licensed enterprises with foreign invested capital and the parties to licensed business cooperations, the State shall take appropriate measures with respect to the interests of investors.

Article 22.- Foreign investors in Vietnam shall be entitled to transfer abroad:

1. Their profit earned from business activities;

2. Payments made for the provision of technology or services;

3. The foreign borrowings, both principal and interest, during the operation process;

4. Their invested capital;

5. Other sums of money and assets lawfully owned by them.

Article 23.- Foreigners working in Vietnam for enterprises with foreign invested capital or for the parties to business cooperation contracts shall, after paying income tax as prescribed by law, be entitled to remit abroad their lawful earnings.

Article 24.- Any dispute between the parties to a business cooperation contract or to a joint venture as well as any dispute between enterprises with foreign invested capital and/or the parties to business cooperation contracts and Vietnamese enterprises shall be first of all resolved through negotiation and conciliation.

In case where the parties to a dispute fail to reach an agreement, the dispute shall be referred to an arbitration body or a Vietnamese court for settlement under Vietnamese law.

With regard to a dispute between the parties to a joint venture enterprise or to a business cooperation contract, the parties may agree in the contract on the selection of another arbitration body to settle the dispute.

Any dispute between the parties arising out of a Build-Operate-Transfer contract, Build-Transfer-Operate contract or Build-Transfer contract shall be settled according to the procedures agreed upon by the parties in the contract.

Chapter IV

RIGHTS AND OBLIGATIONS OF FOREIGN INVESTORS AND ENTERPRISES WITH FOREIGN INVESTED CAPITAL

Article 25.- Enterprises with foreign invested capital and the parties to a business cooperation contract may recruit labor to meet their business requirements and must give priority to the recruitment of Vietnamese citizens; foreigners may be recruited only for jobs requiring technical and managerial expertise that Vietnam has not been up for but Vietnamese labor must be trained for the replacement.

The rights and obligations of laborers working in enterprises with foreign invested capital shall be guaranteed by the labor contracts, the collective labor agreements and the provisions of labor legislation.

Article 26.- The employers, the Vietnamese laborers and foreign laborers must abide by the provisions of labor legislation and other related laws; must respect each other�s dignity, honor and customs.

Article 27.- Enterprises with foreign invested capital must respect the right of Vietnamese laborers to participate in a political and/or politico-social organization as prescribed by Vietnamese law.

Article 28.- Enterprises with foreign invested capital and foreign parties to business cooperation contracts shall have their assets and civil liability insured by Vietnamese insurance companies or other insurance companies permitted to operate in Vietnam.

Article 29.- The transfer of foreign technology into Vietnam under foreign investment projects shall be carried out in the form of capital contribution with the value of technologies or contractual purchase of technologies in accordance with legislation on technology transfer.

The Government of Vietnam shall encourage fast transfer of technologies, especially advanced technologies.

Article 30.- Enterprises with foreign invested capital and parties to business cooperation contracts must, upon the completion of the capital construction for the establishment of enterprises, accept after test operation the constructed projects and settle their expenditures with the certification by a quality control organization.

Enterprises with foreign invested capital and parties to business cooperation contracts shall organize bidding in accordance with legislation on bidding.

Article 31.- Enterprises with foreign invested capital and parties to a business cooperation contract shall enjoy business autonomy in accordance with the objectives stated in the Investment License; may import equipment, machinery, supplies and means of transport; may conduct direct or indirect export and marketing of their products for the implementation of the investment project in accordance with the provisions of law.

Enterprises with foreign invested capital and parties to business cooperation contracts must give priority to purchasing, under the same technical and trading conditions, equipment, machinery, supplies and means of transport in Vietnam.

Article 32.- An enterprise with foreign invested capital may open its branch(es) outside the province or the city directly under the Central Government where it has its head office so as to perform its business activities within the scope and objectives defined in the Investment License and must have the approval of the People�s Committee of the province or the city directly under the Central Government where the branch is to open.

Article 33.- Enterprises with foreign invested capital and parties to business cooperation contracts shall ensure by themselves foreign currencies needed for their activities.

The Government of Vietnam undertakes to support the balance of foreign currencies for the construction of infrastructure projects, the manufacture of essential import substitutes and for a number of other important projects.

Article 34.- The parties to a joint venture enterprise shall be entitled to transfer the value of their capital contribution therein, but priority must be given to the other parties to the joint venture enterprise. In case where the transfer is effected to enterprises outside the joint venture the transfer conditions must not be more favorable than the conditions set for the parties to the joint venture enterprise. The transfer must be approved by all the parties to the joint venture enterprise.

These provisions shall also apply to the transfer of the rights and obligations of the parties to a business cooperation contract.

Enterprises with 100% foreign invested capital shall be entitled to transfer their capital but priority must be given to the transfer to Vietnamese enterprises.

The transfer of capital shall be effective only after the agency performing State management over foreign investment approves the capital transfer contract.

In cases where the capital transfer bears profits the transferor shall pay income tax representing 25% of the profits earned therefrom; if the capital is transferred to Vietnamese enterprises, the tax shall be reduced or exempted.

Article 35.- Enterprises with foreign invested capital shall open accounts in the Vietnamese currency and a foreign currency at a Vietnamese bank, a joint venture bank or a Vietnam-based branch of a foreign bank.

In special cases approved by the State Bank of Vietnam, an enterprise with foreign invested capital may open accounts for their loans at a bank abroad.

Article 36.- The conversion between the Vietnamese currency and the foreign currency(ies) shall be effected at the official exchange rate announced by the State Bank of Vietnam at the time of the conversion.

Article 37.- Enterprises with foreign invested capital and foreign parties to business cooperation contracts shall apply the accounting regime of Vietnam. In cases where there is the need to apply another common accounting regime, the approval of the Ministry of Finance is required.

The regime of amortizing the fixed assets of enterprises with foreign invested capital and foreign parties to business cooperation contracts shall be implemented under the provisions of the Government.

The annual financial statements of enterprises with foreign invested capital and foreign parties to business cooperation contracts shall be audited by an independent Vietnamese audit company or another independent audit company permitted to operate in Vietnam in accordance with legislation on audit. The annual financial statements must be sent to the financial agency and the agency performing the State management over foreign investment.

Article 38.- Enterprises with foreign invested capital and foreign parties to business cooperation contracts shall have to pay a profit tax of 25% of the earned profits; in cases where investment needs to be encouraged, the profit tax shall be 20% of the earned profits; in cases where many criteria for the encouragement of investment are satisfied, the profit tax shall be 15% of the earned profits; in cases where investment needs to be specially encouraged the profit tax shall be 10% of the earned profits.

With regard to oil and gas and a number of other rare and precious natural resources the profit tax shall conform to the Law on Oil and Gas and other relevant laws.

Article 39.- Depending on the investment domain and location defined in Article 3 of this Law, enterprises with foreign invested capital and foreign parties to business cooperation contracts may be exempted from profit tax for a maximum period of 2 years from the time their business become profitable and may enjoy a 50% reduction of the profit tax for a maximum period of 2 subsequent years.

If enterprises with foreign invested capital and foreign parties to a business cooperation contracts carry out projects which satisfy many criteria for investment to be encouraged, they shall be exempted from profit tax for a maximum period of 4 years from the time their business become profitable and may enjoy a 50% reduction of the profit tax for a maximum period of 4 subsequent years.

In cases where investment needs to be specially encouraged, the maximum period of exemption from the profit tax shall be 8 years.

Article 40.- During the course of its operation, a joint venture enterprise may carry forward its loss of any tax year to the following year and such loss shall be made up by the profits of up to a maximum of 5 following years.

Article 41.- After paying the profit tax, a joint venture enterprise shall appropriate 5% of the remaining profits to set up a reserve fund. The reserve fund shall be limited to 10% of the prescribed capital of the enterprise. The percentage of the profits earmarked for setting up the welfare fund and other funds shall be agreed upon by the parties and written in the Statute of the enterprise.

Article 42.- In case of reinvestment in projects in which investment is encouraged, part or the whole of the profit tax already paid on the reinvested profit shall be refunded. The Government shall determine the tax refund rates depending on the reinvestment domain, location, form and duration.

Article 43.- Upon remitting his/her profit abroad a foreign investor shall have to pay a tax of 5%, 7% and 10% of the remitted profit, depending on the capital contribution by the foreign investor to the prescribed capital of the enterprise with foreign invested capital or the capital for performing the business cooperation contract.

Article 44.- Vietnamese who reside abroad and invest in Vietnam in accordance with this Law shall enjoy a 20% reduction of the profit tax on the projects of the same kind, except in cases where they are entitled to a profit tax of 10% and a tax of 5% of the profit remitted abroad.

Article 45.- Basing itself on the provisions of the Government, the agency performing State management over foreign investment shall decide the profit tax rates, the periods of exemption from, and reduction of, profit tax and the rates of the tax on profit remitted abroad in accordance with Articles 38, 39, 43 and 44 of this Law. The tax rates and the tax exemption and reduction periods shall be written in the Investment License.

During the implementation of an investment project, if there is any change in the investment conditions, the tax exemption and reduction for enterprises with foreign invested capital and foreign parties to business cooperation contracts shall be decided by the Ministry of Finance.

Article 46.- Enterprises with foreign invested capital and foreign parties to business cooperation contracts that use land, water or sea surface must pay a rent; in cases where natural resources are exploited a resource tax must be paid as prescribed by law.

The Government shall stipulate the exemption from, or reduction of, the rent of the land, water or sea surface for Build-Operate-Transfer, Build-Transfer-Operate and Build-Transfer projects; investment projects in mountainous, deep-lying, remote areas or areas with difficult socio-economic conditions.

Article 47.- The import and export duties imposed on the goods imported and exported by enterprises with foreign invested capital and parties to business cooperation contracts shall comply with the Law on Import and Export Duties.

The equipment, machinery, specialized means of transport as part of a technological chain imported into Vietnam to create the fixed assets of enterprises with foreign invested capital or to create the fixed assets for the performance of business cooperation contracts or to expand an investment project and the means of transport imported for the transportation of workers shall be exempted from import duties.

The Government shall stipulate the exemption from, and reduction of. import and export duties on other special commodities which receive special encouragement for investment.

Article 48.- Export processing enterprises shall be exempted from import and export duties on the goods exported abroad from the Export Processing Zones and imported from abroad into the Export Processing Zones.

Export processing enterprises and enterprises with foreign invested capital in an Industrial Zone(s) shall enjoy preferential taxation in cases where investment needs to be encouraged or specially encouraged in accordance with the provisions in Articles 38, 39,43 and 44 of this Law. The Government shall detail the preferential tax rates for each type of export processing enterprises and enterprises with foreign invested capital in the Industrial Zones.

Article 49.- In addition to the taxes defined in this Law, enterprises with foreign invested capital and foreign parties to business cooperation contracts must pay other taxes as prescribed by law.

Article 50.- The foreigners and the Vietnamese people working for the enterprises with foreign invested capital or for parties to business cooperation contracts must pay income tax as prescribed by law.

Article 51.- Enterprises with foreign invested capital and foreign parties to business cooperation contracts shall have to abide by the provisions of legislation on environmental protection.

Article 52.- Enterprises with foreign invested capital and business cooperation contracts shall terminate operation in the following cases:

1. On expiry of the operational duration written in the Investment License;

2. At the request of one or more than one party and approved by the agency performing the State management over foreign investment;

3. Upon a decision by the agency performing the State management over foreign investment due to a serious violation of law and the terms of the Investment License;

4. They are declared bankrupt;

5. In other cases as prescribed by law.

Article 53.-

1. Upon termination of operation in one of the cases defined in Points 1, 2, 3 and 5, Article 52 of this Law, enterprises with foreign invested capital and parties to business cooperation contracts must liquidate the assets of the enterprises or liquidate the contracts and fulfill the obligations as prescribed by law.

2. Enterprises with foreign invested capital which are declared bankrupt shall be dealt with in accordance with legislation on bankruptcy of enterprises.

Chapter V

STATE MANAGEMENT OVER FOREIGN INVESTMENT

Article 54.- State management over foreign investment shall include:

1. Formulating the strategy, the all-round plan, plans and policies concerning foreign investment;

2. Issuing legal documents on foreign investment activities;

3. Guiding the branches and localities in carrying out activities related to foreign investment cooperation;

4. Granting or withdrawing Investment Licenses;

5. Stipulating the coordination among State agencies in managing foreign investment activities;

6. Supervising, inspecting and monitoring foreign investment activities.

Article 55.- The Government shall exercise unified State management over foreign investment in Vietnam.

The Government shall stipulate the granting of Investment Licenses by the Ministry of Planning and Investment; shall, basing itself on the socio-economic development planning and plans, the domain, nature and size of each investment project, make decision to assign the granting of Investment Licenses to the qualified People�s Committees of the provinces and the cities directly under the Central Government and stipulate the granting of Investment Licenses to the Industrial and Export Processing Zones.

Article 56.- The Ministry of Planning and Investment as the agency performing the State management over foreign investment shall assist the Government in managing foreign investment activities in Vietnam.

The Ministry of Planning and Investment shall have the following tasks and powers:

1. To preside over the drafting of the strategy and plan for attracting foreign investment and submit them to the Government; elaborate bills and policies concerning foreign investment; coordinate with the other Ministries, ministerial-level agencies and agencies attached to the Government in performing the State management over foreign investment; guide the People�s Committees of the provinces and the cities directly under the Central Government in the observance of laws and implementation of policies on foreign investment;

2. To draw up and systemize a list of investment projects; provide guidance for the investment procedures, and perform the State management over investment promotion and consultancy activities;

3. To receive investment project proposals and preside over the evaluation of and grant Investment Licenses to the investment projects under its jurisdiction;

4. To act as the center for tackling issues arising from the formation, deployment and implementation of foreign investment projects;

5. To evaluate the socio-economic effectiveness of foreign investment activities;

6. To supervise and inspect the implementation of foreign investment activities in Vietnam in accordance with law.

Article 57.- The Ministries, ministerial-level agencies and agencies attached to the Government shall perform the State management over foreign investment according to the following functions and tasks:

1. To coordinate with the Ministry of Planning and Investment in elaborating laws, policies and plans concerning foreign investment;

2. To draw up the plans and lists of projects calling for foreign investment in their respective branches; organize the mobilization and promotion of investment capital;

3. To take part in evaluating investment projects;

4. To guide and settle the procedures concerning the deployment and implementation of investment projects;

5. To supervise and inspect the activities of enterprises with foreign invested capital and parties to business cooperation contracts under their management.

6. To perform other tasks within their jurisdiction as prescribed by law.

Article 58.- The People�s Committees of the provinces and the cities directly under the Central Government shall perform State management over foreign investment in their respective territories according to the following functions and powers:

1. Basing themselves on the socio-economic development plan already approved, to draw up and make public the list of investment projects calling for foreign investment in their respective localities; organize mobilization and promotion of investment capital;

2. To take part in evaluating foreign investment projects in their respective localities;

3. To receive investment project proposals, evaluate and grant Investment Licenses to foreign investment projects in their respective localities according to the assignment of responsibilities by the Government;

4. To settle administrative procedures concerning the formulation, deployment and implementation of investment projects under their jurisdiction;

5. To perform State management over the production and business activities of enterprises with foreign invested capital and the parties to business cooperation contracts in their respective territories;

6. To supervise and inspect the activities of enterprises with foreign invested capital and parties to business cooperation contracts.

Article 59.- The parties or one of the parties or the foreign investor must send to the Investment License granting agency the dossier applying for an Investment License which includes an application for an Investment License, a business cooperation contract or a joint venture contract, the enterprise�s Statute, the economic technical feasibility report and other related documents.

Article 60.- The Investment License granting agency shall consider the application and notify the investor of its decision not later than 60 days after receipt of the valid dossier. The approval shall be notified in the form of an Investment License.

The Investment License shall be as valid as the Business Registration Certificate.

Article 61.- The joint venture contract or the business cooperation contract, the enterprise�s Statute and any change of the business objective, production scale, or the prescribed capital contribution ratio must be approved by the agency performing State management over foreign investment.

Article 62.- The Ministries, ministerial-level agencies, agencies attached to the Government and the People�s Committees of the provinces and the cities directly under the Central Government shall have to settle the procedures related to the deployment of investment projects within 30 days after receipt of the valid dossier.

Article 63.- Foreign investors, enterprises with foreign invested capital, parties to business cooperation contracts, organizations, individuals, State employees and State agencies that violate the provisions of the Foreign Investment Law shall be dealt with as prescribed by law, depending on the seriousness of the violation.

Article 64.- Foreign investors, enterprises with foreign invested capital, parties to business cooperation contracts, organizations and individuals shall have the right to protest and initiate law suits against illegal decisions and acts; and acts of hassling by State employees and agencies. The protests and the filing of law suits and their settlement shall be carried out in accordance with the provisions of law.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 65.- Basing itself on the provisions of this Law, the Government shall stipulate the investment cooperation with foreign countries by hospitals, schools and research institutes in the domain of technology, technical sciences and natural sciences,

Article 66.- Basing itself on the principles laid down in this Law, the Government of the Socialist Republic of Vietnam may sign with foreign Governments cooperation and investment agreements compatible with the economic relations between Vietnam and each country.

Article 67.- This Law takes effect from the date of its promulgation.

This Law replaces the Law on Foreign Investment in Vietnam of December 29, 1987, the Law on the Amendments and Supplements to a Number of Articles of the Law on Foreign Investment in Vietnam of June 30, 1990, the Law on the Amendments and Supplements to a Number of Articles of the Law on Foreign Investment in Vietnam of December 23, 1992.

Article 68.- The Government shall detail the implementation of this Law.

This Law was adopted by the National Assembly of Vietnam, IXth Legislature, 10th session on November 12, 1996.

The Chairman of the National Assembly

NONG DUC MANH